Translation: Original published in Finnish on 08/18/2025 at 08:17 am EEST

Anora’s Q2 result was below our expectations and the comparison period. Although the company reiterated its full-year guidance, our forecasts fell below it, leading us to lower the target price to EUR 3.3 (was 3,5e). With a moderate valuation, we reiterate our Accumulate recommendation.

The Q2 result was weak due to a revenue drop

Anora's revenue decreased by as much as 7% in Q2, when we expected it to be at the comparison period's level. Revenue from beverage sales (Wine and Spirits segments) fell significantly (9%), while we expected the timing of Easter to support slight growth. Anora underperformed the development of the Nordic markets (-2%) in Q2, and it reports that the market shares of the Spirits segment declined in all countries due to losing partners, and that wine sales suffered in Norway and Denmark. Due to weak revenue, Anora's adjusted EBITDA was 14 MEUR, while in the comparison period it was 15 MEUR, and we expected 17 MEUR.

Guidance unchanged as expected

Despite the weak result, Anora reiterated its full-year guidance, expecting an adjusted EBITDA margin of 70-75 MEUR, while in 2024 it was 69 MEUR. For H1, the company is 2 MEUR behind the comparison period. The company stated that the beginning of the year was weaker than it expected. Anora believes that the market development for H2 will be slightly better than in H1. It also believes its positive market share development and margin-supporting efficiency measures will drive the development in H2 to meet the guidance.

For H2, our earnings estimates remained largely unchanged, but due to a weaker-than-expected Q2, our full-year adjusted EBITDA estimate decreased to 67 MEUR, i.e., below the guidance range. This would mean that earnings would remain roughly at the same level as in the previous two years (68-69 MEUR).

CMD awaits after the Q3 result

Kirsi Puntila, who took over as CEO in early March, shared some of her thoughts on the company in connection with the Q2 report. The company said it would accelerate actions to improve financial performance, although it has not yet specified what this means in more detail. The company also announced it is preparing a strategy update, focusing on improving performance in 2025-26 and supporting growth from 2026 onwards.

Anora announced that it will host a CMD on November 5, where it will provide more information about its actions and strategy update. We also expect the company to update its financial targets in this context. The strategy will target 2028, meaning it is for a shorter period than the company's current strategy, published in 2022, where the target year was 2030.

We expect an earnings improvement in the coming years, but value creation is difficult

While we believe Anora can improve its profitability in the coming years we don't see it reaching a significantly higher earnings level than currently. This is partly due to the sluggish growth outlook for the alcohol market (and the risk of further market decline) and, in our view, the company's limited ability to significantly reduce its costs. We expect that Anora's returns on capital will remain at approximately the level of our required return in the coming years, so we do not expect the company to create value.

Cash flow and dividend provide a sufficient expected return

Anora's 025 P/E ~11x is in line with our acceptable multiples. Anora's expected return at the current valuation is higher than our required return, supported by dividend and earnings growth. Dividend plays a significant role and it alone reaches close to our required return. However, a modest growth profile and return on capital weaken the risk/reward ratio. The value of our DCF model is in line with the target price at EUR 3.3 per share.